WFC Wells Fargo and Company

By Paul Vigna 

Shares of Wells Fargo & Co. are back where they started before the bank's sales-practices scandal erupted in 2016, despite the stock's bumpy ride.

That might not seem so bad, but given the timing it is a huge missed opportunity for shareholders.

Wells Fargo shares closed Tuesday at $49.30, just 60 cents below their mark on Sept. 8, 2016, when the San Francisco bank was first fined for practices that included opening deposit and credit-card accounts without customers' knowledge.

Over the same period, shares of big-bank rivals JPMorgan Chase & Co. and Bank of America Corp. have more than doubled, and Citigroup Inc. has surged 71%. The S&P has jumped 52% to new highs and its financial sector has risen 56%.

Those gains translate into market-value bumps of about $192 billion for JPMorgan, $156 billion for Bank of America and $40 billion for Citigroup. Wells Fargo's market value, meanwhile, has declined to $209 billion from $251 billion because of significant share repurchases.

While Warren Buffett -- the bank's largest and most famous shareholder -- may be famously patient with his investments, less well-capitalized investors may get antsy, especially as the fallout from the scandal continues.

Wells Fargo said Tuesday that it took a $1.5 billion charge in the fourth quarter to cover related costs, cutting its profit in half.

The quarter was the first under new Chief Executive Charles Scharf, who has the task of resolving the bank's regulatory problems, fixing its internal culture and restoring its reputation.

On a conference call, Mr. Scharf called Wells Fargo a "wonderful" bank that had made terrible mistakes and hadn't done enough to correct them.

Wells Fargo's "road to recovery was always expected to be a rocky one," said BMO Capital Markets analyst James Fotheringham. This week, "management made it clear that it would also be longer."

(END) Dow Jones Newswires

January 15, 2020 14:22 ET (19:22 GMT)

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